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The SEBI (Merchant Bankers) (Amendment) Regulations, 2025, modernize India’s capital markets by replacing the 1992 framework. Key reforms include a tiered categorization (Category I and II) with significantly higher net worth requirements, reaching ₹50 crore for Category I by 2028. A new liquid net worth mandate and a cap on underwriting commitments (20x liquid net worth) mitigate systemic risk. To ensure active participation, minimum revenue thresholds are introduced. Furthermore, non-core activities must be managed through Separate Business Units (SBUs), shifting oversight toward substance-based supervision.
I. INTRODUCTION
Merchant bankers occupy a pivotal and institutionally sensitive position within the architecture of the modern capital market and function as the principal intermediaries and gatekeepers between issuers seeking access to capital and investors deploying risk capital.
In the Indian context, merchant bankers have historically played a foundational role in the development and expansion of the country’s primary securities market. The Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992 (“erstwhile Regulations”), were formulated at a time when India’s
